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BY KPMG & ICC
IFRS Clinic launched
Transition from the Indian Generally Accepted Accounting Practices (IGAAP) to the International Financial Reporting Standards (IFRS) has gained significant momentum over last few months. With an objective of assisting Corporate India in managing their implementation to IFRS, KPMG and Indian Chambers of Commerce are launching a unique way to assist Corporate India in their journey.
Managing transition to IFRS poses a great challenge to the makers and users of financial statements and to the reporting enterprises. Through this initiative, Corporate India has the advantage of international and Indian experience of several completed and ongoing IFRS projects, in various industry sectors and understanding a practical way of dealing with implementation of IFRS issues.
Based on the recommendations of the Core Group set up to facilitate IFRS convergence in India, the Ministry of Corporate Affairs, on January 22, 2010 and with subsequent announcements on March 31, 2010, has announced the approach and timelines for achieving convergence with IFRS. These announcements eliminate the uncertainty around IFRS convergence in India and clearly indicate that the journey to IFRS is inevitable. The announcement lays down a phased approach to convergence and is similar to the proposed approach of other countries such as Japan and United States. Numerous implementation issues have also been clarified. However, several implementation issues remain, as affected companies consider the impact of the announcement and are looking to gain from the practical experience of other professionals and industry leaders who have already embarked on the IFRS journey.
With this backdrop, Indian Chamber of Commerce (ICC) together with KPMG today launched “IFRS Clinic” to help companies analyse this development, technical aspects, navigating through the complex and practical implementation issues and the matters that companies would need to consider as they seek to converge to IFRS. The objective of this clinic is to hold periodic sessions for Corporate India, to create awareness for IFRS convergence in India through several topics covering, technical, regulatory and policy related updates. It also serves to assist companies to understand the potential technical, business, system and processes impact of convergence to IFRS. These clinics would be held on a monthly basis to address such questions from Industry.
The launch was graced by the Hon’ble Union Minister of Corporate Affairs, Government of India – Mr. Salman Khurshid, as chief guest. Present on the occasion were eminent industry leaders, namely, Mr. Jayanta Roy, President, ICC and Director – Financial Products Distribution, Peerless General Finance & Investment Co. Limited., Mr. Srivardhan Goenka – Senior Vice President, ICC. Mr. V. Venkataramanan, Executive Director, Accounting Advisory Services, KPMG in India and Mr. Madhu Sudan Kankani, Director, Accounting Advisory Services, KPMG in India, shared the professional perspective on this event.
The session started with an inaugural address of Mr. Jayanta Roy, President, ICC observed that adoption of the new international standards could indeed be a beneficial tool for growth and expansion of Indian corporate in the international arena. This would increase the level of confidence of investors in Indian ventures, may help cross border listing of companies, facilitate merger and takeover activity and help to attract foreign investment in Indian enterprises. However, harmonizing existing Indian standards with IFRS will have several significant areas of differences which need to be clarified by experts. The IFRS Clinics organized by the Chamber and KPMG are expected to help overcome the difficulties towards conversion. Mr. Roy, further added, “ Converting to IFRS is not just a technical accounting exercise – it is a significant project that will require support from multiple business functions including IT, Tax, treasury and human resources.“
Also speaking at the inaugural session, Mr. V. Venkataramanan, Executive Director, Accounting Advisory Services, KPMG in India, congratulated ICC on taking the lead in this important initiative. He stressed on the need to combine both technical knowledge and practical application experience to apply IFRS successfully in India. Mr. Vekataramanan said, “KPMG is commited to supporting such initiatives, the need to create further awareness amongst all stakeholders, and to help ensure that IFRS convergence in India transitions successfully. The process of transitioning to IFRS may come with its share of challenges; it also represents a discontinuous opportunity for Indian finance professionals to develop globally relevant skills relating to accounting.”
Mr. Madhu Sudan Kankani, Director, Accounting Advisory Services, KPMG in India shared his perspectives on the landmark MCA announcement on phased approach for achieving convergence with IFRS and the emerging trends in Industry. In his address, Mr. Kankani stated “There will be two separate sets of Accounting Standards under Section 211(3c) of the Companies Act, 1956. The first set would comprise the Indian Accounting Standards, which are converged with the IFRS and which shall be applicable to the specified class of companies in a phased manner. The second set would comprise the existing Indian Accounting standards and would be applicable to other companies, including SMC.”
He also elaborated on the formats of IFRS clinics and the manner in which relevant professionals can obtain benefits from such sessions. He highlighted certain concerns with the Industry especially on the taxation aspects.
Shri. Salman Khurshid, Hon’ble Union Minister, Ministry of Corporate Affairs, Government of India shared the thought process and regulatory updates on the convergence process. He also clarified that there are some questions that the government was dealing with, are specially the concerns raised by Industry on fair value accounting. IFRS is a global operational platform and it is efficient in dealing with transaction cost. This IFRS clinic will provide a single language to the accountants in solving the issues and will help us in developing a fair system for the corporate houses in dealing with different aspects of their business like- general accounting, methods of financial reporting, CSR activities and other related issues. Through this system people can deal smoothly with the compliance issues. This is an excellent initiative that will provide an opportunity to the companies to share their issues related to IFRS and will help to find out practical solutions to it.
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